Borrowing for treatment plant makes sense: City

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This article was published 15/07/2023 (1153 days ago), so information in it may no longer be current.

The cost of upgrades to Brandon’s water treatment plant have risen since first estimates were made due to a combination of inflationary pressures and a better idea of what the work will entail.

On Monday, Brandon City Council is set to give first reading to a bylaw that would give it authority to borrow a further $15 million toward the project in order to receive a matching $15-million contribution from the province announced in January.

The project aims to bring the facility up to current water standards not being met by the existing infrastructure.

When joint provincial-federal funding was announced for the project back in August 2021 under the Investing in Canada Infrastructure Program, the cost was estimated to be around $115 million.

So far, the federal government has committed $46 million to the project, the provincial government $53.33 million — including the January announcement — and the City of Brandon $40.67 million, which doesn’t include the new $15 million in borrowing.

When former mayor Rick Chrest wrote an op-ed in the Sun last September about active infrastructure project in the city, he said the estimated cost was $125 million.

The media release sent out last week when the city announced it was borrowing another $15 million stated that the estimated cost was now $155 million.

Speaking to the Sun on Friday, city manager Ron Bowles said there were a few factors contributing to the higher estimates.

“When we do these big construction projects, as you start doing more and more detailed engineering, you start getting a better handle on what the costs will be,” Bowles said. “And of course, through this phase, we went through the pandemic. And so now we’re into an era of post-pandemic inflation, as well as you know, what’s happening in Europe.”

A document attached to the agenda for Monday’s council meeting states that pre-tender estimates for the building containing a new membrane treatment system have seen significant increases from the initial estimates devised in 2019.

According to Bowles, most of the previously approved borrowing on the city’s part for the project has yet to be carried out as the bulk of construction hasn’t started yet.

If the province hadn’t contributed $15 million, Bowles said work on the plant would still go ahead but the project would likely need to be phased over a longer time period.

The document agenda states that if the $15 million from the province isn’t matched, the city will still need to make the same investment later on but likely won’t have a funding partner to do so.

“If the additional $30 million is not accepted at this time, the city’s strategy would be to de-scope the Upgrade & Expansion project to within the original funding allocation, while still achieving the outcome of improving drinking water quality in Brandon,” the agenda document reads.

“De-scoping would primarily impact the aging, existing treatment facility, increasing maintenance costs in the interim. De-scoped elements will still require investment for a reliable water system and will be planned for in a future capital program.”

Though Bowles said there’s a possibility costs for the project could still increase, there’s also the chance that they could decrease as well.

Mayor Jeff Fawcett said Thursday that while the province’s initial press release in January wasn’t explicit about its latest contribution needing to be matched by the city, Brandon has been aware the whole time that it was going to be necessary.

While the city has incurred a lot of debt recently to finance projects like the water treatment plant, drainage upgrades in southeast Brandon and new wastewater lift stations in the southwest, the mayor said there will still be room for more borrowing before the debt ceiling is reached even if the latest debenture is approved.

Under provincial rules, municipalities must maintain a debt to municipal assessment ratio of under seven per cent and a debt to revenue ratio of under 20 per cent.

If the $15-million debenture is approved, Fawcett said the city will have around $164.5 million in debts, including borrowing that has been approved but has yet to be used. That would leave the city at around 5.39 per cent under the first ratio and 15.3 per cent under the second.

That would leave the city with room to borrow around $49 million more if needed for other purposes, though the mayor said Brandon will continue to pay down its debts.

Fawcett said he has concerns about the feasibility of future spending for future needs, including an outdoor aquatic facility Brandon is currently analyzing the feasibility of.

“We always have to reflect on the long-term interests of the city,” he said. “We are having a review for that particular project, but there other things that are super functional for our city that we need to make sure are also being addressed.”

He said a four-year budget plan is being worked out ahead of the next round of budget deliberations in 2024 that will help chart things like necessary capital projects. For some of those projects, the mayor said he’s continuing to work with the federal and provincial government for funding assistance.

Ultimately, he said Brandon putting up some of its own funds to obtain the provincial funding makes sense.

“Clean, safe water is one of our key things,” Fawcett said. “These are the new standards. We’re going to be at them for the long term. It’s better for everybody in our city.”

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